America Is Ailing—and Leading the World

“This is the first great crisis of the post-American world,” former Swedish Foreign Minister Carl Bildt tweeted on Wednesday. “The UN Security Council is nowhere to be seen, G20 is in the hands of the Crown Prince of Saudi Arabia and the White House has trumpeted America First and Everyone Alone for years. Only the virus is globalized.”

In its succinct conflation of the new coronavirus with a crisis of globalization under U.S. President Donald Trump’s “Make America Great Again” banner, Bildt’s tweet represents a common line of thinking. It is also wrong.

Clearly it isn’t only the virus that is globalized—otherwise we would not even be able to identify the mystery disease sweeping the world. It has been identified and tracked from the outset by highly collaborative teams of scientists in Asia, Europe, and the United States. The World Health Organization has not entirely failed. Of course, there are still Trump supporters who want to label it the “Wuhan virus” and some who even would still downplay the threat it poses by equating it with the flu. But that isn’t the same as outright denial of the fact that a virus is sweeping the globe. (In that sense, it is not the same as their debilitating refusal to take climate change seriously.)

In the world of medical science, labs in the United States—which we should differentiate from scientists with American passports or those in good standing with the U.S. Defense Department—are still at the heart of scientific advance. Who would bet against an American pharmaceutical company (that is, a company listed on an American stock exchange with a headquarters somewhere in the United States) leading the way on vaccines? It might be someone else who finds the coronavirus vaccine first. But your money would likely be on a U.S. firm.

[Mapping the Coronavirus Outbreak: Get daily updates on the pandemic and learn how it’s affecting countries around the world.]

Yes, the United Nations Security Council has been absent. But that is hardly surprising given the state of relations among the United States, China, and Russia before the coronavirus arrived. Great-power rivalry paralyzes an institution like that. But what does that tell us about globalization and America’s role in it? Clearly U.S. power is not absolutely hegemonic. But the U.N. Security Council was absent for large parts of the Cold War without that signaling a post-American world. The power of the United States simply isn’t all-encompassing. By that standard, only the fleeting, unipolar moment of the 1990s measures up.

Bildt is right that something has been shaken by the coronavirus. But that is not best measured in places like the Security Council or the G-20. The international community that Bildt points to is a community of states. Those states rest on domestic, national foundations. The real shock of the pandemic has been the spectacular incapacity of both the United States and Europe to contain the crisis. It is the shambles at home that will do the lasting damage.

Among those countries that have experience a major outbreak, the coronavirus establishes a new metric of international standing: COVID-19 deaths per capita. To see how shambolic the Western response has been, let us assume, for sake of argument, that things are not as bad as the U.S. president has now told us to expect. Assume that the United States suffers only 100,000 dead. And assume for sake of argument that China’s figures are understated, for propaganda purposes, say by a factor of 10. Assume 33,000 people there have died so far, not 3,300. Then, in terms of COVID-19 deaths per head of population, the outcome will be 12 times worse in the United States than in China, with 12 times more deaths per capita in the country many like to call the richest and most powerful in the world, a country that had six weeks’ warning about the nature of the outbreak. If the Chinese numbers are actually approximately correct, then the difference is a factor of 120. The performance of the countries once considered the United States’ main allies in Europe will be little better.

Of course, this is shocking. It is even humiliating for the Americans, and perhaps profoundly delegitimating. It ought to be. We are at the point when the recovering Asian states need to quarantine travelers coming from the West as an infection risk. How long will it be before the United States can confidently assure the world that its remoter provinces are clear of infection risk?

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But are Bildt and others correct when they extrapolate this profound dysfunction of domestic order to mean the end of American influence? To see why that suggestion is simplistic and premature, all you have to do is to travel not to the U.N. in midtown Manhattan but down the island to the building at 33 Liberty St., the Federal Reserve Bank of New York. It is from that building that America’s national Federal Reserve system, with its headquarters in Washington, D.C., operates its international business.

Dollar-based finance spans the entire world. And over the last few weeks it has been busy, astonishingly so. The panic in the markets has dominated the headlines the way it did in 2008 not just because people are dying, but also because we have actually avoided a Lehman Brothers moment of major banks cratering. We have avoided a crisis in part because the banks are more solid. But the pressures on the market-based asset management system have been gigantic. Everyone wants dollars. The pundits have been hammering away demanding action. And the Fed has delivered—remarkably. Its interventions not only at home but also in the international arena have been quicker and larger in scale than 2008. This week, the Fed has added a new innovation: a repurchase agreement facility for foreign central banks. This is crucial, because it allows them to access dollar liquidity without engaging in destabilizing sales of their portfolios of Treasurys. This is a huge expansion of the Fed’s reach. It will still not be enough. The International Monetary Fund will be needed. And, in a little-noticed move on March 27, the United States took the lead in voting for the renewal of the IMF’s finances.

This is not what one would have expected in an age of “Make America Great Again.” It was reasonable to expect Republicans in Congress, or the White House itself, to constrain the Fed. But that’s not what has happened.

A cynic would say this is not surprising. The Republicans aren’t really ideologues. Even their “America first” rhetoric is just that: rhetoric. Deep down, they are just tacticians. They obstruct a Democratic president and give their own president what he needs. Look at their votes on whether to provide an economic stimulus. In January 2009, every single Republican in Congress voted against President Barack Obama’s $825 billion spending package. Now they have given overwhelming support to the $2.2 trillion stimulus signed last week by Trump, and more may be in the works.

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Trump, for his part, has always been a sort of activist. Of course, he has few coherent economic ideas, but he is no respecter of orthodoxy of any kind. When it comes to saving businesses, he is with former European Central Bank President Mario Draghi: He’ll “do whatever it takes.” In 2008, Trump did not hesitate to break ranks with his conservative friends and applauded the Troubled Asset Relief Program and the Fed and Obama’s stimulus. If the Fed needs to help global business in a crisis, why not?

This is consistent with his “Make America Great Again” campaign slogan, because global leadership is not about charity. You can put the United States first—and the Fed has—just so long as you remember that Europe and Japan come second, the big emerging markets third, and the rest have to be sorted into fourth and fifth class. The order is important, as is prioritizing the United States, but so too is the fact that all countries, or at least all the other important pieces of the world economy, are part of the consideration. There is a recognition that there could be blowback, and that these are allies.

If you are willing to ignore the crude rhetoric and silly finger-pointing, there is a logic here. But that coherence should not be exaggerated, either. There is no “Make America Great Again” grand strategy cooked up between Fed chief Jerome Powell and White House economic advisors such as Robert Lighthizer and Peter Navarro. The trade wars initiated by the Trump administration were real and were profoundly dysfunctional. The grand strategic rivalry with China driven by America’s hawks is even more unsettling to global capital. And no less real are Trump’s cartoonish press conferences and tweeting about TV ratings.

The U.S. president’s coronavirus response is a contradictory, incoherent shambles. And many people will die as a result. But that doesn’t make this a post-American world. This is precisely what a world entangled with and exposed to America’s incoherent and erratic system of power looks like.